spv

SPV is an acronym with multiple meanings in finance and technology. In corporate finance, SPV stands for Special Purpose Vehicle, a legally separate entity created to isolate financial risk and hold assets or cash flows for a specific project. It is commonly used in project finance, securitization, asset-backed lending, and off-balance-sheet financing. Assets transferred to the SPV may support issued debt secured by those assets. The structure is often designed to be bankruptcy-remote, shielding the SPV’s liabilities from the parent company’s creditors. Regulators and auditors examine SPVs for transparency, accounting treatment, and true-sale criteria; concerns include complexity, off-balance-sheet risk, and potential for misuse.

Separately, SPV also stands for Simplified Payment Verification, a method described in Bitcoin to enable lightweight clients to verify transactions without downloading the full blockchain. An SPV client downloads block headers and requests Merkle proofs from full nodes to confirm that a transaction is included in a particular block. This approach offers faster startup and lower storage, making it suitable for mobile wallets and devices with limited resources. It provides probabilistic rather than cryptographic proof of full chain integrity and relies on honest full nodes; connect to malicious peers and the security guarantees weaken. SPV is widely used by wallets that do not require independent validation of the entire chain, trading maximum security for efficiency.